Are energy fees about to make a comeback?

Do you have the power? / Photo by ykanazawa1999 - FlickrThe Oyster Bay Beach Resort is a highrise hotel in St. Martin that promises guests white sand beaches, “breathtaking” views of the Caribbean and a “paradise found.”

But Jack Permadi says he found more than that when he stayed at the property recently. Permadi, who had traveled to the island from North Royalton, Ohio, for vacation, says the hotel asked him to pay extra for something that’s normally included in the price of a stay.
“When we checked in, we were asked to accept or reject a mandatory $12 per night utility charge for the week,” he says. “We rejected it, thinking it covered air conditioning — which we do not use.”

But that didn’t work.

“When we checked out, we found an $84 charge, and when we objected, we were told it covered all utility costs and had to be paid by everybody,” he says.

Permadi wonders if a hotel is allowed to quote a price that excludes utilities without notifying a guest in advance.

I put that question to the Oyster Bay Resort. It didn’t respond.

Mandatory utility fees became popular in the United States about a decade ago, but most hotels dropped them after a series of lawsuits brought against them by angry customers. The most high-profile was a series of complaints against Wyndham International settled in 2006 (PDF). Various hotel guests accused the company of quoting a room rate but then adding a mandatory fee that covered energy costs, among other things.

The Oyster Bay surcharge sure brings back memories. And they aren’t good ones.

I couldn’t find any mention of the utility surcharge on its site, Permadi says it wasn’t disclosed when he booked the room, and the hotel didn’t want to talk about it, despite repeated efforts to reach it.

That makes me suspicious, to say the least.

Will energy fees start to spread again? Anything is possible. If enough guests agree to pay $12 a day for electricity and water at the Oyster Bay, then what’s to stop nearby resorts like the Colombus Hotel or the Sol from adding them, too? And then — who knows?

But should they be allowed?

I understand a hotel’s perspective on this issue. You want rates to be competitive, which is code for low. Why not quote a base rate, but then add a mandatory resort fee or energy surcharge, which will increase revenues and may even have some tax advantages, depending on where your hotel is located.

Another argument I hear often is that in the interests of “transparency” the hotel is breaking out its expenses, so guests can know how much it costs for utilities or operating a swimming pool. That’s a little bit of a stretch.

But still, as long as you disclose the fee somewhere in the booking process, it’s perfectly legal — right?

Guests don’t necessarily see it that way, though. They believe the room rate is all they’ll have to pay, except maybe taxes. They’re not really curious about the economics of running a hotel, so transparency isn’t an issue. What is an issue is paying significantly more than they thought they would for their accommodations.

Should hotels be required to quote an “all-in” price? As your consumer advocate, I think you know the answer.

But let’s try a more nuanced question: Are the hotels right — should they be permitted to quote a low base rate that doesn’t include mandatory extras, as long as they’re adequately disclosed, in order to keep their rates low?

Or should they be required by law to quote a rate that includes everything?

Permadi, for his part, isn’t that upset by the energy fee.

“We have stayed at the Oyster Bay Beach Resort before and will return in the future,” he told me. “I just find this to be a bad practice and would rather they be up front with the cost right from the start.”

Update (5/25): Just received the following email from Ricardo Perez, the hotel’s general manager:

We do not charge energy surcharge to regular paying resort guests. We do charge a $12 per day energy surcharge for a two bedroom and $7 for a studio apartment for our timeshare guests and exchangers given the high level of utility costs on the island.

We pay over 42 cents per KWH in St. Maarten and since the water is desalinated also the cost per cubic meter is very high.

In addition we would like to also clarify that we clearly state on our confirmation letter the energy surcharge is charge upon check out. We will be more than happy to supply you with a copy or our standard confirmation letter.

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at *protected email*. Got a question or comment? You can post it on the new forum.

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